Strong PMI’s Help Risk Appetite Increase

European stock markets managed to rebound on Turnaround Tuesday and are moving higher, with Eurozone peripherals outperforming as the Dollar moved higher and risk aversion recedes. Strong PMI numbers out of the Eurozone confirmed that the recovery remains on track and is broadening. News that the U.K’s Supreme Court ruled that notification of Article 50 on the U.K.’s exit from the EU will be subject to parliamentary approval may have helped to underpin the recover in European equities, but it is unlikely to do more than delay the process if anything. Oil prices are also higher and WTI has managed to move above USD 53 per barrel and U.S. stock futures are also up. Markets remained cautious in Asia amid uncertainty over Trump’s regulatory and trade policies and the Nikkei closed with a -0.55% loss, despite a dip in the Yen, but Hang Seng and ASX managed to move higher.

WTI futures have built on yesterday’s rebound from $52.31, presently showing a 0.2% gain at $52.85. A high was seen at $53.30, which is 4 cents short of yesterday’s peak. Signs that Opec and other key producers are sticking to the output deal, along with a report showing that global oil inventories fell by 24 million barrels’ quarter over quarter to 5.7 billion barrels in Q4 have up-propped crude prices, offsetting concerns about rising U.S. production.

The UK’s Supreme Court ruled against the government in the Brexit case, concluding in the appeal trial that the notification of Article 50 must be subject to a parliamentary vote. The Court also ruled that Scotland and Northern Ireland do not have a veto. The government is now expected to quickly put through a succinctly-worded bill through the House of Parliament and the House of Lords.

European Manufacturing PMI’s Continue to Impress

On the continent, manufacturing survey data continues to impress. Eurozone composite PMI falls back slightly in January, to 54.3 from 54.4 in the previous month. The dip reflects a stronger than expected manufacturing PMI, which rose to 55.1 from 54.9, and a decline in the services reading to 53.6 from 53.7. Still very high numbers, signaling robust expansion in both manufacturing and services sector and a broadening of growth momentum as France catches up.

German January PMI readings were mixed. The manufacturing PMI surprised on the upside and jumped to 56.5 from 55.6 in the previous month, despite the correction in the last manufacturing orders number. The services reading on the other hand declined unexpectedly to 53.2 from 54.3 and against expectations for a slight uptick in the number. The unexpected mix saw the composite PMI declining to 54.7 from 55.2 in the previous month. Still a very strong reading, that confirms that the economic recovery continues at the start of 2017.